Frencken - RHB Invest 2023-11-27: Expect Earnings To Bottom Out; Upgrade To Buy

• We turn positive on Frencken (SGX:E28) as we see signs of revenue and earnings bottoming out, led by better-than-expected 3Q23 revenue traction from improving customer orders and a more positive semiconductor recovery outlook. Upgrade Frencken to BUY from Neutral, new S$1.45 target price from S$0.97, 28% upside with ~3% FY24F yield.
• - Read this at SGinvestors.io -

3Q23 revenue ahead of forecast.

• Frencken’s 3Q23 revenue of S$184m (- 6% y-o-y, +3% q-o-q) outperformed estimates. Growth was broad-based, with all segments posting positive q-o-q growth, except for industrial automation.
  • - Read this at SGinvestors.io -
  • The medical segment (+8% q-o-q vs -4% q-o-q in 2Q23, S$31m) saw higher sales to a significant customer in Europe.
  • The analytical & life science unit received higher sales in Europe and Asia (+6% q-o-q vs +1% in 2Q23, S$43m), and the automotive division was driven by products such as new antenna for EVs (+2% q-o-q vs -4% in 2Q23, S$18m).
  • Industrial automation was the only key segment that recorded lower numbers, being affected by a decrease in its customers’ capex (-59% q-o-q vs -12% q-o-q in 2Q23, S$7m).

Profit margin remained steady

• Read more at SGinvestors.io.

Alfie Yeo RHB Securities Research | https://www.rhbgroup.com/ 2023-11-27 SGinvestors.io

---